DEFA14A: BlackRock Receives Support from ISS and Glass Lewis in Proxy Fight Against Saba Capital

BlackRock is urging shareholders to vote for its board nominees after receiving recommendations from ISS and Glass Lewis, while rejecting Saba Capital's proposals to terminate BlackRock as investment advisor for certain funds.

Summary

• BlackRock is in a proxy fight with Saba Capital Management, L.P. regarding board nominees and proposals to terminate BlackRock as investment advisor for several closed-end funds.
• Institutional Shareholder Services Inc. (ISS) and Glass Lewis have recommended that shareholders vote for BlackRock's board nominees at various funds, including BlackRock California Municipal Income Trust (BFZ), BlackRock New York Municipal Income Trust (BNY), and BlackRock MuniYield Pennsylvania Quality Fund (MPA).
• ISS and Glass Lewis also recommend voting against Saba's proposals to terminate BlackRock as investment advisor for BFZ and BlackRock Science and Technology Term Trust (BSTZ).
• BlackRock highlights that Glass Lewis fully rejected Saba's nominees for BFZ, BNY, and MYN.
• BlackRock emphasizes recent enhancements across its closed-end fund complex, including discount management programs, distribution increases, and fee waivers, providing $2.9 billion in liquidity.
• Shareholders are urged to vote for BlackRock's nominees using the WHITE proxy card and disregard any gold proxy cards received from Saba.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the support from ISS and Glass Lewis, but tempered by the ongoing proxy fight with Saba Capital and the uncertainties surrounding the shareholder vote.

Positives

• ISS and Glass Lewis support BlackRock's board nominees and oppose Saba's proposals.
• BlackRock has taken actions to enhance its closed-end fund complex, providing $2.9 billion in liquidity.
• Glass Lewis recognizes the qualifications of BlackRock's board nominees over Saba's.
• The boards recent actions, particularly the distribution rate increase, are more likely to have been the main contributing factor to the recent narrowing of the Funds NAV discount.
• The overall performance picture nonetheless supports the view that the departure from past underperformance may be sustainable.

Negatives

• Saba Capital is attempting to replace BlackRock's board nominees and terminate BlackRock as investment advisor for certain funds.
• ISS recommends voting in favor of Sabas nominees for BFZ and BSTZ.
• BlackRock respectfully disagrees with ISS recommendation to vote in favor of Sabas nominees for BFZ and BSTZ.

Risks

• The outcome of the proxy vote is uncertain.
• Saba Capital's actions could lead to harmful liquidity events or changes in investment strategies.
• Forward-looking statements are subject to numerous assumptions, risks, and uncertainties.

Future Outlook

BlackRock will update performance and certain other data for the funds on a monthly basis on their website in the Closed-end Funds section of www.blackrock.com, as well as certain other material information as necessary from time to time.

Management Comments

• We welcome Glass Lewis full support for the qualified Board nominees of BFZ, BNY and MYN, and for BlackRock as investment adviser to BFZ, as well as ISS support for many of the funds Board nominees and rejection of the termination proposals at BFZ and BSTZ, said R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds.
• We also appreciate that Glass Lewis, unlike ISS, supported Phillip Holloman on MYN.
• We respectfully disagree with ISS recommendation to vote in favor of Sabas nominees for BFZ and BSTZ.
• Sabas campaign has never been about governance, performance or investment mandates, said R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds.

Industry Context

This announcement reflects the ongoing trend of activist investors challenging established fund managers and seeking to influence corporate governance and investment strategies in closed-end funds.

Comparison to Industry Standards

• The document references peer group performance when discussing the TSRs of BFZ.
• The document references peer group performance when discussing the distributions, NAV discount, and expenses of MYN and MHN.
• The document references peer group performance when discussing the distributions, NAV discount, and fees of MPA.

Stakeholder Impact

• The outcome of the proxy vote will impact shareholders through potential changes in board composition and investment strategy.
• Employees of BlackRock could be affected by changes in the investment advisory agreement.
• The fund's performance and management will impact investors' returns.

Next Steps

• Shareholders are urged to vote using the WHITE proxy card.
• The annual meetings of shareholders will be held on June 17 and June 18, 2024.

Key Dates

Keywords

BlackRock, Saba Capital, proxy fight, board nominees, investment advisor, closed-end funds, ISS, Glass Lewis, BFZ, BNY, BSTZ, shareholder vote